Nakheel to start sale of homes on Palm Jumeirah

Dubai: Nakheel will start selling townhouses on Palm Jumeirah next month, the developer's first residential project since the property market crashed in 2008, chairman Ali Rashid Lootah said.

Nakheel announced a plan to build 102 townhouses on the island in September.

The company will develop mid-range homes alongside the apartments and villas that comprise most of Palm Jumeirah's dwellings.

"Not everyone wants a villa or an apartment," Lootah said in an interview at his office. "There's demand for townhouses on the beach, but we're careful not to increase the density on the palm."

The Palm Residence project will test demand for property in a market in which prices have dropped by more than 65 per cent since their peak in mid-2008. This prompted Nakheel to write down the value of its real estate.

Most of the project will be financed by sales agreed before construction work begins, a business model that was common before the crisis. Lootah declined to comment on the expected cost of the development. He said Nakheel won't sell bonds or seek loans from international banks to pay for it.

Stalled projects

The developer expects to spend Dh1.4 billion this year to complete nine projects across Dubai, after work was halted because of the crash, according to an Islamic bond prospectus distributed in August and obtained by Bloomberg News in September. Nakheel plans to complete 7,982 homes in 2012, the document showed.

Nakheel's revenue will probably double by 2014, lifted by about 3 million square feet (278,709 square metres) of retail space, Lootah said. He didn't say what revenue will amount to in that year. The company reported revenue of Dh1.5 billion for the first half and is due to release 2011 results next month.

Limitless was put under Nakheel's management in July 2010, has almost restructured a $1.2 billion loan, Lootah said. The company, which halted projects across the world following the crisis, plans to resume work on developments in Moscow and Saudi Arabia, where housing demand is highest, Lootah said.

Before the global crisis hit, Limitless was developing Khimki, a villa and low-rise apartment project on 1.14 million square-metres to house 14,000 people alongside the Moscow River Canal. The company's Al Wasl project in Riyadh was designed to include more than 50,000 homes as well as offices and retail space on 1,400 hectares, according to the company's website.